Ellwest Stereo Theatres of Memphis, Inc., et al. - Page 18

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their belated efforts to comply with the law after the errors
were discovered. They believe this conduct attests to their good
faith and militates against an inference of willful neglect.
According to Revenue Agent Petzold’s uncontroverted testimony,
Shindel presented to her in 1993 a summary of payments for prior
years. Shindel testified that he could not recall whether the
payment summary was given to Petzold before or after she
uncovered evidence of the payments herself and questioned him
about them. She testified that it was she who raised the issue
first. Compliance efforts made years after the obligations arose
and only after prompting by an examining agent are not
inconsistent with the inference that the original failure to
comply was due to willful neglect.
We conclude that petitioners have not shown that their
failure to file returns and deposit tax for the years at issue
was due to reasonable cause and not due to willful neglect.
Accordingly, we sustain respondent’s determination that they are
liable for additions to tax under sections 6651(a)(1) and
6656(a).
Additions to Tax Under Section 6653(a)
Respondent determined that petitioners are liable for the
additions to tax under section 6653(a). For the taxable years at
issue section 6653(a) provided for an addition to tax if any part
of an underpayment of tax is due to negligence or intentional
disregard of rules or regulations. For taxable years 1981